REIT sectors

As discussed in our article "What is a REIT?", REITs invest in a variety of real estate property types from apartment buildings to data centers. While most REITs focus on a particular property type, some have multiple types of real estate in their portfolios.

The traditional property sectors for REITs are as follows:

1. Office REITs: Office properties have single or multiple tenants and can range from Class A to C based on location and other quality factors. Highly desired locations reduce vacancy risk. On the other hand, office properties often require high capital expenditures to keep them new.
2. Industrial REITs: Think of warehouses or distribution centers. The rise of e-commerce made this type of real estate very sought-after. Their capital expenditure needs are low.
3. Retail REITs: These focus on large regional malls, outlet centers, or grocery-anchored shopping centers. The rise of e-commerce has haunted this sector for years, but there are some resilient brick-and-mortar retailers that enjoy continued success.
4. Residential REITs: Include among others REITs that specialize in apartment buildings, student housing and single-family homes. Most of the time, residential REITs focus on specific geographical markets or classes of properties.
5. Lodging/Resort/Hotel REITs: Propoerties targeting tourism, from business travelers to vacationers. These had some of the highest volatility in cash flows in the REIT space, even before the Covid pandemic.

Some other specialty REIT sectors include: 

• Net lease
• Billboard
• Data centers
• Farmland
• Ground lease
• Hospital
• Infrastructure
• Prison
• Self-storage
• Skilled nursing
• Timberland